Jet lag doesn't always have to work against you. In the right city, waking up at dusk and going to bed at dawn can put you perfectly in time with a city's heartbeat - especially if that city happens to be New Orleans. Waking up at four in the AM, on the other hand, and putting your head down at 10pm pretty much marks you out as a local in Luang Prabang. Here, the hours are measured not by the broker's bell or the call for last drinks under neon but by the alms march of monks at the break of day, and by the time it takes to ride your bicycle home from the market. But change may be coming to Luang Prabang, and the time to taste its tranquillity is now.

This is the former capital of Laos, an ancient and holy place. It's a city where Buddhism is a key employer and prayer is one of the main exports. But even if it weren't for the high density of temples lining the streets, there'd still be something almost sacred about the landscape itself. The old town lies on a peninsula formed by the confluence of two rivers, the mighty Mekong and the sinuous Nam Khan, and beyond them the hills shoulder their way into the horizon, wreathed in mist some days, smoke on others.

Luang Prabang is perhaps the best-preserved city in what was once Indochina. Its French Colonial architecture is remarkably intact, thanks to its protection under a UNESCO World Heritage order, but so too is the people's way of life. The airport is small, the overland and river transit links narrow in gauge, and somewhat perilous. You can drop the fantasy of it being undiscovered - the Lonely Planet crowd has been here for years - but at the same time, it retains that feeling of being for the better part unspoilt. Tour buses are forbidden entry, and touts are a curious rarity. Motorcycles still outnumber cars, and they're outnumbered dramatically again by bicycles. Backpackers there may be, but they're not here in beery packs. The 11.30pm curfew that closes all the bars (no, really - all the bars) means that this has not, mercifully, become a stop on the party circuit, and narco-tourists skip it in favour of the promises of the backstreets of Vientiane or the opium shakes and happy pizza shops of Vang Vieng.

It's a place of stillness and great charm. A place where spiritual life is just that - alive - rather than sealed in tombs or steeped in sombreness. Each day opens at dawn with the morning alms giving, the tak bat. On Sakkarine Road, the main drag, the procession is a popular photo opportunity, an activity your hotel can organise, replete with a bowl of sticky rice, a cushion to kneel on and a do and don't cheat-sheet. ("Observe the ritual in silence, and contribute an offering only if it is meaningful to you and you can do so respectfully"; "do not photograph the monks too closely. Camera flashes are very disturbing both for monks and lay people.") It seems slightly absurd as a spectacle, and if you're participating you'll find you need to get good at making balls of sticky rice fast in the face of so many bowls toted by monks dewy and gnarled in a wave of orange, yet the ritual's beauty and dignity prevails. And Lao people are there in force themselves to give. Out on the edges of town the monks file by in fives and sixes rather than by the score, and they chant their thanks as they walk.

A shrine is always close at hand. They're everywhere, as formal and storied as the vast curves of the Watermelon Stupa, built in 1503, or as subtle and ephemeral as a niche in a riverbank. Some are piled with fruit, child-high yellow candles, and intricate garlands of flowers wound around cones of banana leaf. At others the offerings are as humble as small pinches of sticky rice placed among waterfalls of burned-out wax and ragged marigolds. The occasional temple-side stall sells, among other offerings, tiny live birds in woven cages, waiting to be freed.

Many of the stupas here sparkle with mosaics of coloured glass and tile, giving them a sweetly disco sheen over the mottled stone and peeling gilt. Ferocious, goggle-eyed nagas run the length of roofs, twining up columns and down bannisters. These dragon-like snakes, which sometimes sport several heads, are the guards of the temples, the protectors of Luang Prabang and of the Buddha. The Buddhas crowd the dark, quiet spaces within the wats, splendidly varied in their guises and scale, supine, standing, smiling and serene, like stock in some warehouse of transcendence. These dark temple rooms are like wells of stillness from which Luang Prabang draws its blessed languor.

The town takes its name from the Prabang Buddha, a statue of the holy image in the palms-outreached dispelling-fear pose. Depending on who you ask, it came here from Sri Lanka in the first century or is of much later Khmer origin. What you see standing today in the Royal Palace Museum - which was, until 1975's communist takeover, home to the royal family - may or may not be a replica put in place after the real thing was sold, stolen or put into safekeeping elsewhere. The museum, built for the king in 1904, is a fascinating mix of Indochine antiques and oddments of back-country diplomacy. In the library, there's a Bach toccata on the Victrola; works by Zola and Plutarch nudge Lenin and Ho Chi Minh on the shelves. In another room: a pair of opal-encrusted gold boxes presented by Harold Holt, a Sèvres tea service, silver from Cambodia, steel from the USSR and the key to the city of Los Angeles.

Luang Prabang is blessed with mercifully few sights to see. It has, instead, a more general picturesque quality that provides small pleasures at each turn. Once you've seen the museum and become stupa-fied visiting temples, you climb the steps to the peak of Mount Phousi in the centre of town, and find the modest Wat Tham Phousi, a gun emplacement and an imprint of the Buddha's foot. (The Ph in Phousi is pronounced locally as a P, and talk of climbing Pussy Mountain delights many a low-minded visitor. Ahem.) Take a daytrip upstream for the postcard sights of Pak Ou caves (more Buddhas), or head south for a swim at unspectacular Kuang Si Falls. Or don't do anything at all.

The true pleasures of Luang Prabang come from riding your bike by the river, with the wind in your face and flowers in the air. Dipping into the smaller streets, there's eggs being cooked in the shell on makeshift grills, and people selling bundles of Job's tears for snacks. The fun lies in taking a boat out on the river, or sharing a drink at one of the little bars that dot its banks. Big Tree Cafe sits under the spreading, bromeliad-furred branches of - yes - a big tree. Coconut Sunset is fronded by palms. Here's a restaurant with low chairs and tables selling grilled duck with a spicy sauce. Apart from the genuinely excellent Beer Lao, the bars sell bottles of Chimay and Leffe Blonde. Others have vast vitrines of "healthy herb whiskey" packed with medicinal-looking roots and bark on the bar. It's a flâneur's tropical paradise.

Each night Sakkarine Road becomes a market pulsing with commerce. Like other shopping in the region, it's distinctly soft-sell by South East Asian standards. The variety of what's on offer can be surprising: Laos is one of the most ethnically diverse places in South East Asia, and there are something like 49 different groups in this part of the country alone. The clothes and ornaments, knitted and woven wares are astonishing in their hues, while handmade papers and dyed silks vie with Beer Lao singlets among the must-have souvenirs of the city. There's mass-produced tat here, true, but there are also new handmade scythes, hoes and machetes that in no way look as though they're made for the tourist trade.

The markets are home to some of the best eating you're likely to find in Luang Prabang. If you need a vague handle on Lao food, picture north-eastern Thai leavened with Vietnamese, and you're some of the way there. It's a landlocked country, so the cuisine is reliant on the bounty of the river and the jungle, on the water buffalo and swine, sticky rice and herbs. As you walk the streets at night, grilled buffalo, whole river bream and rice-rich blood sausages abound. Larb salads are big here, typically of chunkily cut catfish, sometimes with swatches of boiled buffalo skin mixed in, and seriously hot in any case. Buffalo skin is a bit of a local favourite. I asked a stallholder what he thought the flavour of Luang Prabang was, and he replied: it's the taste of river weed with spicy dip. The river weed is harvested right on the city's doorstep, boiled with tamarind, salt and sugar and dried to make kaipen, which resembles crisp sheets of nori speckled with sesame seeds. Jaew bong, the spicy dip it's served with, is a sweet-hot relish made with the skin of the water buffalo. It's ubiquitous, and apparently keeps well for a very long time.

Beyond the markets, it's individual dishes that stand out in my memory rather than whole meals as highlights: an elegant bamboo broth flavoured with the local "spicy wood" at Les 3 Nagas; the water-buffalo steak frites at the relatively swish L'Elephant; a breakfast dish of steamed rice crêpes stuffed with pork and mushrooms and garnished with shards of fried garlic at the Hôtel de la Paix Luang Prabang. The single best thing I ate, though, was a salad I bought from an elderly woman on Sakkarine Road - a salad of vermicelli, minced pork, ground peanuts and puffed rice. Before she secured its banana-leaf wrapper with a toothpick she gestured to the tub of roasted red chilli powder with a raised eyebrow, one of those questions that isn't really a question. It cost about 70 cents.

The sweet peculiarity of the nightlife here is something else to savour. At the backpacker-favourite Hive Bar the beer is predictably cheap, but it's the Laotian fashion shows and hip-hop dance nights featuring the local kids that are the real draw. The best tunes and the best booze are to be had at the Icon Klub, a boho haunt that's as much Yeats as Tom Waits, but to immerse yourself deeper in local culture, you'll need to hop a ride out to Muong Swa, a deeply daggy bar in the suburbs where you can participate in the local equivalent of line-dancing. Don't fear the rice cooker by the basins in the toilets - it's merely keeping the hand towels warm.

Of course, if you're staying at a glam hotel, your choice of diversions can be considerably grander in scope. For a town that's all about piety, Luang Prabang is impressively well stocked in the earthly pleasures department, and is home to a collection of seriously luxurious hotel properties that would put your average small nation-state to shame. World Heritage building restrictions being what they are, new hotels can't simply be thrown up in the middle of town. The international brands that have managed to infiltrate the city have had to do so on Luang Prabang's terms. The Aman resort revived a dilapidated hospital site, Orient-Express's La Résidence Phou Vao sits back atop the Hill of Kites, 3 Nagas was an ice-cream factory, Satri House is the former home of a minor Lao prince, while one of the newest top-end additions, the Hôtel de la Paix Luang Prabang, is housed in a former correctional facility.

Either the inmates at the prison were kept in extraordinarily high style back in the day, or else plenty of time and money have been spent making de la Paix less penitentiary. True, a high wall contains the compound, the corner lodgings are billed as "tower suites", and the street address is inescapably "Old Prison Road", but apart from the relative absence of really big windows, "jail" isn't the first thing that springs to mind when you're luxuriating here. Geckoes wander around high ceilings, and the bathrooms open onto private gardens, some of them with swimming pools.

Amantaka would be staggering in its grandeur were it not tempered by such elegant design and an eye for scale. The pavilion-like suites take their design cues from the shaded verandahs and painted shutters of the French Colonial main buildings. Again, some suites have pools of their own, though the swimming pool in the centre of the property is more than ample for a small army. Peel back any of the layers here and you'll find more attention to detail. The shelves are stocked with a thoughtful mix of contemporary authors and classics (Gay Bilson, Neil Perry and Kylie Kwong among them), while fresh limes appear unasked for in the suite in time for sundowners. The WiFi is free, the iPods loaded with interesting music, and the baths deep enough to swim in.

As a hotel group, Aman has something of a reputation for going the extra mile for its guests. If you're happy to pay for extras, there's plenty to tempt you. Taking in sunset on the river on the hotel's timber launch, lolling on a daybed drinking cocktails made refreshingly sour with tamarind, is truly lotus-eating stuff. You want to ride an elephant with a mahout guide? Visit a Hmong village? Learn the secrets of Lao weaving? No problem. But it's the cooking class that's the real humdinger. It kicks off at the not-so-lotus-eating hour of dawn with a walk through the morning market with Anousith, or Sit, the locally born chef. You may think yourself an old hand in the markets of Asia, but for sheer vibrancy and quirkiness (not to mention compelling eats), the Luang Prabang morning market wins hands down.

Here's a string of crabs knotted in bamboo. There are jungle herbs wild and fresh enough to make any would-be forager-chef cry. The prizes of the morning's catch from the river boats lie in rigour on banana leaves and old rice sacks. A stiff squirrel strikes a note of furred contrast next to piles of plucked birds. You smell the dried squid stall before you see it, and you're still savouring the wares from the lady who sells the best sausage in town (or so chef Sit says) minutes after it's gone. And that's just the stuff you can roughly put a name to. There are coconut cakes hot from the griddle, glasses of hot sweet tea, and a sort of pork terrine pressed in banana leaves, each diamond-shaped piece embedded with a violently hot green chilli. Oh, and buffalo skin. Lots of buffalo skin.

The class reconvenes in a market garden on the outskirts of town an hour or so before lunch. And by "class" I mean you and your partner in crime; it's a two-guest maximum. First order of business is to pick tomatoes, Lao basil and dill from the beds. The farm is run by Amantaka to provide organically grown produce for its restaurants. Sai Phongsavath, the gardener, lives on site in a small wooden hut on stilts. "That's AmanSai," he jokes. It's hard to overstate how sympathetic the setting is; the cooking is done in traditional terracotta pots over coals in an open-sided pavilion looking out over a field of rice. Chef Sit demonstrates the scary, free-hand way to shred green papaya for his som tum-like tam mak hoong, while my fellow student and I work our way diligently through the chopping and pounding of fish, rice and herbs which we steam in leaves for mok pa ("a favourite dish for Luang Prabang," says Sit). We simmer galangal, mushrooms, lime leaves, tamarind and chicken for soup, and braise eggplants, long beans and pork to make moo phak sikai. Then we retire to a cushioned pavilion by a pond to savour the fruits of our toil, with the bonus of actual tropical fruits for dessert.

Back in Australia, I come home to an email from Sai Phongsavath, the vegetable farmer. I'd given him my card when we met, and he wrote to thank me for visiting the farm and to say he hoped I had enjoyed the cooking class. "Next time you come to Laos," he wrote, "come and visit me again, and we'll drink Beer Lao together." I'm going to have to take him up on that offer, and soon. Luang Prabang, this tranquil sanctuary, rests in the balance. The lights at the deluxe hotels twinkle in the dark, but for now there's still a girl gathering kindling not a minute's walk from their doors, and just around the corner a man is grilling six small fish over a fire on a stick. Tomorrow the airport may expand, the touts may come, but today it's still a place where a stranger will invite you to share a beer, a city of chickens and wood smoke, and a place of peace.